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Catalyst (CPRX) Up 16% Since Last Earnings Report: Can It Continue?

Zacks Equity Research
Anthem (ANTM) seems to be a good value pick, as it has decent revenue metrics to back up its earnings, and is seeing solid earnings estimate revisions as well.

A month has gone by since the last earnings report for Catalyst Pharmaceutical (CPRX). Shares have added about 16% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Catalyst due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Catalyst Posts Narrower-Than-Expected Loss in Q2

Catalyst reported a loss of 6 cents per share in the second quarter of 2018, narrower than the Zacks Consensus Estimate of a loss of 8 cents but wider than the year-ago loss of 5 cents.

Being a development-stage company, Catalyst does not have any approved product in its portfolio yet. Hence, the company did not generate any revenues in the quarter.

Quarter in Detail

Research and development (R&D) expenses were $3.7 million, up 51.1% from the year-ago quarter. Costs rose in the first six months of 2018 due to a slew of factors. Rise in consulting expenses as Catalyst prepared to submit its NDA for Firdapse in first-quarter 2018, milestone expenses linked with the acceptance of Catalyst’s new drug application (NDA) submission in May 2018, expenses related to medical affairs program as well as compensation and related personnel costs as Catalyst expands headcount to support trials and programs were the reasons driving costs.

General and administrative expenses totaled $2.6 million, up 52.1% from the year-ago quarter. The increase in expenses is attributable to higher pre-commercialization expenses, headcount and corporate expenses as the company builds up its infrastructure and commercial programs to prepare for a potential launch of Firdapse in 2019.

Pipeline Update

Currently, Catalyst has two candidates under development — Firdapse and CPP-115.

The FDA accepted the NDA for Firdapse, which the company had resubmitted during the previous quarter, for the treatment of Lambert-Eaton myasthenic syndrome (LEMS). The FDA also granted a priority review status to the NDA and an action date of Nov 28, 2018 is set for the same. The company expects to launch the drug in early 2019 assuming approval.

The company also expects top-line results from Firdapse’s phase III study for MuSK antibody positive myasthenia gravis in the second half of 2019.

The company expects top-line results from the phase III congenital myasthenic syndromes (CMS) (CMS-001) study in the first half of 2019.

 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

Currently, Catalyst has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, Catalyst has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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